Category: Games

The game theory of SCOTUS nominations

Despite the conventional wisdom that Trump would surely nominate a judge to secure a conservative majority that would ultimately overturn Roe v. Wade, getting that judge successfully confirmed would diminish Trump’s reelection prospects (by energizing the Democratic base to vote for leaders who would pack the court or ratify PR and DC as states). But Trump doesn’t care a whit about abortion, much less ideology. He only cares about his power and his reelection. His incentive, it seems to me, is to choose a weak nominee who will surely fail confirmation or a nominee whose confirmation will be deferred post-election. If the nomination is rejected, the Democrats will be seen as obstructionists and the Republican base will be energized. A deferred confirmation, in contrast, will act as a carrot that Trump can dangle in front of congressional Republicans, who will more strongly campaign for him. In either case, an unsuccessful confirmation will work in Trump’s favor, while a confirmed conservative will act against his reelection interests. Such a maneuver by the Trump campaign can, of course, only happen surreptitiously, because it would anger both Democratic and Republican leadership to be manipulated this way.

That is from Shiran Pasternak in my email.

The greatest gaming performance ever?

Or is chess a sport?

First Magnus Carlsen “privatizes” chess competition, naming the major tournament after himself, setting all of the rules, and becoming the residual claimant on the income stream.

He reshapes the entire format into a seven set, four months-long series of shorter tournaments, consisting of multiple games per day, 15 minutes per player per game, with increment.  It seems most chess fans find this new format far more exciting and watchable than the last two world championship matches, which have featured 22 slow draws and only two decisive games (with the title decided by rapid tiebreakers in each case — why not just head to the rapids?).

Magnus won all but one of the “sets” or mini-tournaments, along the way regularly dispatching the game’s top players at an astonishing pace, often tossing them aside like mere rag dolls.  Even the #2 and #3 rated players — Caruana and Ding Liren — stood little chance against his onslaught.  Carlsen kept on winning these mini-tournaments against fields of ten players, typically all at a world class level.

A Final Four then led to a 38-game, seven-day showdown between Carlsen and Hikaru Nakamura, not decided until the very last set of moves yesterday.  Note that at the more rapid pace Nakamura may well be a better player than Carlsen and is perhaps the only real challenge to him (at slower classical speeds Nakamura would be in the top twenty but is not at the very top of the rankings).

Nonetheless Carlsen prevailed.  Nakamura had the upper hand in terms of initiative, but in the final five-minute tie-breaking round, Carlsen needed to pull out 1.5 of the last 2 points, which indeed he did.  He drew by constructing an impregnable fortress against Nakamura’s Queen, and in the final “sudden death Armageddon” round a draw is equivalent to a victory for Black.

Along the way, at the same time, Magnus participated in Fantasy Football, competing against millions, at times holding the #1 slot and finishing #11 in what is a very competitive and demanding endeavor.

My Conversation with Annie Duke

Here is the transcript and audio, here is the opening summary:

Annie joined Tyler to explore how payoffs aren’t always monetary, the benefits and costs of probabilistic thinking, the “magical thinking” behind why people buy fire insurance but usually don’t get prenups, the psychology behind betting on shark migrations, how her most famous linguistics paper took on Steven Pinker, how public policy would change if only the top 500 poker players voted, why she wasn’t surprised to lose Celebrity Apprentice to Joan Rivers, whether Trump has a tell, the number one trait of top poker players, and more.

Here is one bit from Annie:

DUKE: So when I went on my first date with my husband, my brother and brother-in-law immediately decided to make a market, and it was whether we were going to get married. Now to be fair, my husband and I — before we went on our first date, we’d been friends. Both my brother and my brother-in-law knew my eventual husband, but this is when we’re going on our first date. They make a market. I think that my brother-in-law ended up bidding 23.

My brother then called me up, cracking up, that my brother-in-law had bid 23 when we hadn’t been on a first date yet. And I then started laughing at my brother, said, “Well, that means you had to bid 22. Why are you laughing at him? You somehow bid 22. It’s our first date.” Now, that’s because we’re all people who sort of think this way. And so this sort of becomes the fun of the friendship, but there are other people . . .

And this from Annie:

DUKE: My suspicion is that if only the top 500 poker players voted, people would be thinking a lot more about edge cases — where things could go wrong, for sure, because poker players just are obsessed with that. I think that there would be more long-termism as opposed to short-termism, again, because you have to be obsessed with that as a concept. I think that people would be thinking about “What are the unintended consequences? How does this look?”

Another thing that’s really important that poker players think about is, “If I put this policy in that looks like it’s awesome, how can someone come in and find the cracks in it so that it can turn into something bad?” I feel like the top 500 players would definitely be thinking in that way more.

You will have to read or hear the dialogue to take in my many good questions.

Solve for the equilibrium

What might be some alternate (if possibly slightly unfair) titles?  How about

“A Swede by Any Other Name” or “America > Sweden”?

“Refuting Friedman-Savage, convexity all over”

“Their capitalist bosses made them turn out”

“They all supported lockdown in the poll”

What else?


What should I ask Annie Duke?

I will be doing a Conversation with her.  Here is part of her Wikipedia page:

Anne LaBarr Duke (née Lederer; September 13, 1965) is an American professional poker player and author. She holds a World Series of Poker (WSOP) gold bracelet from 2004 and used to be the leading money winner among women in WSOP history (a title now held by Vanessa Selbst). Duke won the 2004 World Series of Poker Tournament of Champions and the National Heads-Up Poker Championship in 2010. She has written a number of instructional books for poker players, including Decide to Play Great Poker and The Middle Zone, and she published her autobiography, How I Raised, Folded, Bluffed, Flirted, Cursed, and Won Millions at the World Series of Poker, in 2005.

Duke co-founded the non-profit Ante Up for Africa with actor Don Cheadle in 2007 to benefit charities working in African nations, and has raised money for other charities and non-profits through playing in and hosting charitable poker tournaments. She has been involved in advocacy on a number of poker-related issues including advocating for the legality of online gambling and for players’ rights to control their own image.

She also has a new book coming out this fall, How to Decide: Simpler Tools for Making Better Choices.  So what should I ask her?

The new economics of chess

I just finished watching one of’s Magnus Carlsen-affiliated rapid on-line chess tournaments, when today (a day later?) I see that another tournament has started.  And with Magnus himself playing, as well as other world-class players.  Note that Magnus both plays in these tournaments as the #1 attraction, and he owns an equity share in them, albeit with other investors.

So I’ve been trying to model the production of chess services in my mind.

I start with the point that viewers care much more about live, fresh games than games from a week ago.  Many sports of course operate on this same basis.

The second point is that most chess players have a relatively low opportunity cost of time, Rogoff and Kasparov excepted, plus some chess players can substitute into poker for profit (and may have quit chess already).  In fact what they do in their spare time is to…play chess!  Often with each other, and often on-line.  So if you offer to pay them some amount for doing basically the same, they will sign up.  Especially during a pandemic when many of them are trapped under relatively severe quarantines.

It is also the case that a chess player can play many days in the year, perhaps not every day, but you really can play a lot without tearing your rotator cuff.

It then seems the equilibrium is a much higher supply of chess tournaments, especially since on-line play removes some of the previous barriers to entry, such as needing a venue and some physical infrastructure.

You might even end up with a kind of Malthusian equilibrium, where the supply keeps on expanding to meet a fairly low marginal cost.

But this is a “superstars” kind of competition, and so the returns will go to the scarce factor.  That scarce factor is Carlsen himself, who garners far more attention than any other player.  And as noted he is an equity holder in this venture and as a player he has been winning the #1 prize money.  Over time, you might expect the returns of some of the other players — maybe in the top ten but not so famous or glamorous — to approach the Malthusian level.  Perhaps much of the public doesn’t care if Magnus plays #9 or #16, who in any case are only a small number of rating points apart.

Notice how well Magnus Carlsen understands reputation and internet production.  He keeps on posting “Banter Blitz” videos on YouTube, which show him playing speed chess on-line and commenting on the games as they proceed.  He dramatically expanded the supply of chess tournaments, which he earns income from.  He already was “the scarce factor,” and he has dramatically expanded the supply of attention aimed his way.  He understands that successful internet production is frequent production.

On-line chess viewing is way up (NYT) with the pandemic, and also because of these efforts.

Do not underestimate Magnus Carlsen.  He has been #1 in classical chess, rapid, and blitz, all at the same time.  He is a huge YouTube star in chess.  He has won a tournament about chess trivia, and he has been #1 in fantasy football for the whole world (not an easy feat).

And now he is bringing an economic revolution to chess, with himself as the #1 labor and equity earner at the same time.

Is the coronavirus making UBI look better?

My last Bloomberg column was co-authored with Garry Kasparov, here is one excerpt:

Another positive sign for UBI is that most Americans seem keen to return to their workplaces. One fear has been that UBI would lead to a couch-potato culture, with people choosing to stay at home even when they’re finally able to leave. But blue-collar service workers are continuing to brave the front lines even when faced with reasonably high risks of infection. They are not trying to get fired so they can collect unemployment. White-collar workers, meanwhile, are feeling restless and unproductive. Working from home may become more common, but most people seem eager to get back to the office — especially if the alternative is a combination workplace/schoolhouse.


…the crisis is serving up a very different and inferior bargain than the one many original UBI supporters advocated. Institutionalizing emergency measures designed to respond to Covid-19 would be irresponsible. It would entrench UBI without the prerequisite productivity boom from artificial intelligence and automation. (For some time it appeared the opposite might happen — namely, an AI boom but no UBI.)

I can report that Garry was a real pleasure to work and co-author with.  Here is my earlier Conversation with him.

Coronavirus sports markets in everything, multiple simulations edition

For $20, fans of German soccer club Borussia can have a cut-out of themselves placed in the stands at BORUSSIA-PARK. According to the club, over 12,000 cut-outs have been ordered and 4,500 have already been put in place.

Here is the tweet and photo.

And some sports bettors are betting on simulated sporting events.  (Again, I’ve never understood gambling — why not save up your risk-taking for positive-sum activities?  Is negative-sum gambling a kind of personality management game to remind yourself loss is real and to keep down your risk-taking in other areas?)

Via Samir Varma and Cory Waters.

Whether or not we are living in a simulation, *they* are living in a simulation

Savers at the Bank of Nook are being driven to speculate on turnips and tarantulas, as the most popular video game of the coronavirus era mimics global central bankers by making steep cuts in interest rates.

The estimated 12m players of Nintendo’s cartoon fantasy Animal Crossing: New Horizons were informed last week about the move, in which the Bank of Nook slashed the interest paid on savings from around 0.5 per cent to just 0.05 per cent.

The total interest available on any amount of savings has now been capped at 9,999 bells — the in-game currency that can be bought online at a rate of about $1 per 1.9m bells.

The abrupt policy shift, imposed by an obligatory software update on April 23, provoked a stream of online fury that a once-solid stream of income had been reduced to a trickle with the stroke of a raccoon banker’s pen.

“I’m never going to financially recover from this,” one player wrote on a Reddit forum. “Island recession incoming,” said another.

Here is more from the FT, via Malinga Fernando.

Tethered pairs and locational extremes

Let us assume that you, for reasons of choice or necessity, are spending time in close quarters with another person.  You are then less inclined to visit corona-dangerous locations.  In part you are altruistic toward the other person, and in part for selfish reasons you do not wish to lower the common standard of care.  If you go to a dangerous location, the other person might decide to do the same, if only out of retaliation or frustration.

In essence, by accepting such a tethered pair relationship, you end up much closer (physically, most of all) to one person and much more distant from the others.  You are boosting your locational extremes.

The physically closer you are to the other person, the more easily you can tell if he or she is breaking the basic agreement of minimal risk.  That tends to make the tethered pairs relatively stable.  Monitoring is face-to-face!

Tethered pairs also limit your mobility, because each of the two parties must agree that the new proposed location is safe enough.

People who live alone, and do not know each other initially, might benefit from accepting a tethered pair relationship.  The other person can help them with chores, problems, advice, etc., and furthermore the other person may induce safer behavior.  (Choose a carpenter, not a specialist!)  Many people will take risks if they are the only loser, but not if someone else might suffer as well.

A tethered triplet is harder to maintain than a tethered pair.  For one thing, the larger the group the harder it is to monitor the behavior of the others.  Furthermore, having a third person around helps you less than having a second person around (diminishing marginal utility, plus Sartre).  Finally, as the group grows large there are so many veto points on what is a safe location ( a larger tethered pair might work better with a clear leader).

Yet over time the larger groups might prove more stable, even if they are riskier.  As more things break down, or the risk of boredom and frustration rises, the larger groups may offer some practical advantages and furthermore the entertainments of the larger group might prevent group members from making dangerous trips to “the outside world.”

There is an external benefit to choosing a tethered pair (or triplet, or more), because you pull that person out of potential circulation, thus easing congestion and in turn contagion risk.  Public spaces become safer.

As you choose a tethered pair initially, the risk is relatively high.  The other member of the pair might already be contagious, and you do not yet have much information about what that person has been up to.  As the tethered pair relationship proceeds, however, it seems safer and safer (“well, I’m not sick yet!”), and after two weeks of enforced confinement it might be pretty safe indeed.

Very often married couples will start out as natural tethered pairs.  At the margin, should public policy be trying to encourage additional tethered pairs?  Or only in the early stages of pandemics, when “formation risk” tends to be relatively low?  Do tethered pairs become safer again (but also less beneficial?), as a society approaches herd immunity?

It may be easier for societies with less sexual segregation to create stable tethered pairs, since couple status is more likely to overlap with “best friend” status.

One advantage of good, frequent, and common testing is that it encourage the formation of more tethered pairs.

You can modify this analysis by introducing children (or parents) more explicitly, or by considering the varying ages of group members.  You might, for instance, prefer to be a tethered pair with a younger person, but not everyone can achieve that.

The world is running a disturbing psychometric test

Put aside the people with small (and not so small) children at home, and observe whether the pandemic has boosted or destroyed their productivity.  That is one measure for how they handle stress, and whether you might wish to trust them with a start-up or some other major project requiring quick adaptation and performance under duress.  It may or may not be a measure for their ordinary performance on the job.

Consider the now-cancelled Candidates’ chess tournament in Russia.  Ding Liren was one of the two clear favorites (with Caruana), and he lost three games in the first half of the tournament.  That is evidence he does not play well under an extreme degree of stress.  Yet he still is rated #3 in the world, from a career playing under conditions of “not a pandemic level of stress but still world-class levels of competitive stress.”

Grischuk had been saying the tournament should be called off, even in midstream.  Probably he was right, but if play had continued would you have predicted him to come in first?  Caruana, the American, was worried he may not be able to get home after the tournament.  His play was OK but subpar, at least for a world-ranked number two.  The non-favored but sturdy Nepomniachtchi was up three games, before unwisely playing a Winawer defense with the black pieces, but still he was the clear leader.  How should we now revise our opinions of him?

A friend of mine writes to me:

I have submitted 4 papers in 2 weeks. Two R and Rs [revise and resubmits] done and sent back and two new papers sent out. Very close on 2 more. Then I guess I’ll start freaking out or something. Working is keeping me less stressed and more sane.  You can really see the divide on Twitter between people getting shit done and people spending all their time hyperventilating.

David Brooks (NYT) considers how you have been living your life.

The psychometric stress test is being run, including on our institutions, regions, and nations.  We’ll see how it goes.

Robert Browning and Ingmar Bergman in a Bloomberg column

With all those fools going to bars and concerts, or running marathons, it is evident we still need to solve the problem of entertainment, as I argue in my new Bloomberg column.

It is instructive to look back to the days of World War II. The U.S. government played a critical role in encouraging Hollywood to make cheery movies, and it helped by not trying to force every actor into the armed services. Major league baseball, the national pastime of the era, continued to hold a regular season and a World Series, again to distract people from wartime worries. Many top players, such as Ted Williams, were away fighting, but there were adequate replacements. The government knew that wartime drama could not be the only drama on tap.

With Covid-19, the goal is to keep people at home, at least if they are not essential workers. But if staying at home is too boring, cabin fever will take over and people will run out to social gatherings when they ought to be staying put. So solving the entertainment problem is one very real piece of the puzzle for minimizing the effects of the coronavirus and keeping Americans not just in good spirits but healthy.

The very worst scenario is that the coronavirus itself — how it is playing out, how officials and celebrities and neighbors are reacting — becomes our main entertainment. It could become an ongoing horror show that drives us crazy and makes people even more cynical about politics.

To avoid such a mix of frustration and terror, I have a modest proposal: We should restructure a few of our traditional entertainments to be safe from the coronavirus.

As suggested on Twitter, how about inducing a few of the cable providers to offer free streaming for a few months?  The Met has announced a big increase in opera streaming.  And:

Or how about proceeding with some version of the NBA Finals? Take a subset of the best qualifying teams, test every player for coronavirus, isolate them in a remote area with a college gymnasium, and have them proceed with a shortened version of the real thing in front of only a TV crew. With so many other public events closed down, television viewership would probably reach an all-time high, and the sense of drama would be incredible. It would be one NBA Finals we would never forget, and the quality of play would respond to the very high psychological stakes.

Ben Golliver serves up a concrete NBA proposal.  You’ll have to click through to get to the Browning and Bergman parts, the latter being Easter egg.  At least the Candidate’s Tournament still seems to be on in chess, you can all watch that for the next few weeks, starts Tuesday I believe, try

Lecturing alone won’t work: we really do need to make it more fun for people to stay at home!

Toward a simple theory of YouTube and gaming

Outsiders and critics often think of YouTube and computer gaming as entertaining and quite superficial modes of cultural consumption.  I have increasingly moved away from that point of view, and to pursue the argument I will note that lately my favorite YouTube video is Magnus Carlsen doing 100 chess endgames in 30 minutes.  That is not recommended for most of you, but I believe that is part of the point.  I now think of YouTube as a communications medium with (often, not always) high upfront “investment in context” costs.  So if a lot of videos seem stupid to you, well sometimes they are but other times you don’t have enough context to understand them, or for that matter to condemn them for the right reasons.  This “high upfront costs” model is consistent with the semi-addictive behavior exhibited by many loyal YouTube users.  Once you start going down a rabbit hole, it can be hard to stop, and the “YouTube is superficial” models don’t really predict that kind of user behavior, rather they predict mere channel-surfing.

Did you know that Yonas, my Ethiopian contact in Lalibela, and recipient of royalties from my book Stubborn Attachments, loves YouTube videos on early Armenian church history?  He seems to know all about that topic.  A lot of those same videos would not make much sense to me.  I could follow them, but they wouldn’t communicate much meaning, whereas the Ethiopian and Armenian Christian churches have a fair amount in common, including in their early histories.

Has the popularity of PewDiePie — 103 million subscribers — ever mystified you?  I have in fact come to understand the material is brilliant, though not in a way I care about or wish to come to grasp in any kind of detailed way.  For me the entry costs are just too high relative to the kind of payoff I would achieve.  You really have to watch a lot of videos to get anywhere with grasping the contexts of his various jokes and remarks.

This also helps explain why there is no simple way to find “the best videos on YouTube.”

Perhaps computer games have some of the same properties.  They have great meaning to those who know their ins and outs, but leave many others quite cold.  Sometimes I hear people that things like “Twenty or thirty years from now, computer games will develop into great works of art.”  I doubt that.  To whatever extent computer games are/will be aesthetically notable, those properties are probably already in place, just with fairly high upfront context costs and thus inaccessible to someone such as I.

The high upfront costs, of course, mean a high degree of market segmentation and thus perhaps relatively high profits for suppliers, at least in the aggregate if not in every case.

Could it be that these top cultural forms of today have higher upfront costs than say appreciating 18th century Rococo painting?

In any case, trying to understand the cultural codes of 2020 is a truly difficult enterprise.

For this material, I wish to thank a related conversation with S.

Why Didn’t Ancient Rome have Dungeons and Dragons?

Why didn’t ancient Rome have Dungeons and Dragons? I am talking, of course, about the game. Anton Howes presents the general problem:

A theme I keep coming back to is that a lot of inventions could have been invented centuries, if not millennia, before they actually were. My favourite example is John Kay’s flying shuttle, one of the most famous inventions of the British Industrial Revolution. It radically increased the productivity of weaving in the 1730s, but involved simply attaching a little extra wood and string. It involved no new materials, was applied to the weaving of wool — England’s age-old industry — and required no special skill or science. Weaving had been “performed for upwards of five thousand years, by millions of skilled workmen, without any improvement being made to expedite the operation, until the year 1733”, was how Bennet Woodcroft — one of the nineteenth century’s most important historians of technology — put it. (Lest you doubt that description of Woodcroft, he was, in addition to being an inventor himself, the man who compiled and categorised England’s entire patent record up to 1852, and who collected the inventions that would later form the basis of London’s Science Museum, particularly some of the earliest steam engines — among the most important machines in human history — that grace its engine hall today. My hero!) Weavers had been around for millennia, as had shuttles: one is even mentioned in the Old Testament (“My days are swifter than a weaver’s shuttle, And are spent without hope”). As a labour-saving invention, Kay’s flying shuttle was even technically illegal.

I keep coming back to this example, because it goes against so many common notions about the causes of innovation. When it comes to skill, materials, science, institutions, or incentives, none of them quite seem to fit. But I keep seeing more and more such cases. There’s the classic example, of course, of suitcases with wheels – why so late? Was the bicycle another candidate?

…The economist Alex Tabarrok calls these cases “ideas behind their time”. I tend to just call them low-hanging fruit. Hanging so low, and for so long, that the fruit are fermenting on the ground. I now see them everywhere, not just in history, but today — probably at least one per week. And I now have a new favourite example, suggested yesterday on Twitter by Jordan Chase-Young: tabletop role-playing games.

Was it lack of the right the bureaucratic mindset? Lack of numeracy? Lower population densitie? Were such games invented but then lost to history? Ultimately Howes rejects these explanations, I think correctly.

Physically, there was nothing that actually stopped the invention of such games centuries or even millennia earlier. It required no special level of science, skill, or materials. So why did it take so long? Rather than there being any constraints, soft or otherwise, I think it’s simply because innovation in general is so extremely rare. It’s a matter of absence, rather than of barriers. The reason we have had so many low-hanging fruit throughout history is just because very few people ever bother to think of how to do things differently. We are, most of us, quite set in our ways. So even today, when there are many more inventors alive than at any previous point in human history, the fermenting fruit still abound.

Innovation doesn’t happen very often. How many people have ever invented a new way of doing anything? If stasis is the norm, then we should expect that many great ideas are routinely overlooked. For an economist this is an uncomfortable thought because we tend to think that profit opportunities are quickly exploited (no $500 bills on the ground). But while that is certainly true for choices within constraints it may not be true for choices that change constraints. This is also consistent with Paul Romer’s views on the combinatorial space of possible innovations—when the combinatorial space is vast and the explorers few, the innovations will be few and far between. What times, places and institutions generate more explorers?

Jason Crawford on twitter has more background and thoughts.

Why are people getting worse at The Price is Right?

Americans are worse at The Price Is Right than they used to be. On the game show, which has been running since 1972, four contestants are asked to guess the price of consumer products, like washing machines, microwaves, or jumbo packs of paper towels. The person who gets closest to the actual price, without going over, gets to keep playing and the chance to win prizes like a new car. In the 1970s, the typical guess was about 8% below the actual price. People underestimate the price by more than 20% in the 2010s.

This finding comes from recently released research by Jonathan Hartley, a data analyst currently studying public policy at Harvard University. A longtime fan of the show, Hartley was inspired to conduct his research after reading a research paper from 1996 that reveals contestants don’t use optimal bidding strategies—they too rarely bid just a dollar over the highest previous bid—and is one of the early economics papers to show how people could be irrational. Hartley wondered what else the data might show. He found that the accuracy of  people’s guesses sharply decreased from the 1970s to the 2000s, and then stabilized in the 2010s.

And why? There are three main hypotheses:

First, inflation in the US was much higher and much less stable in the 1970s and 80s. When inflation is high and variable, people become more attentive to prices, noticing they are paying more for goods than before.

Second, the rise of e-commerce may have made people less sensitive to price. Research by the economist Alberto Cavallo finds that online competition has made prices more similar across sellers, both online and off. As a result, people may feel less of a need to do price comparisons.

Third, there are more products than ever. There are 50 times as many products at a grocery store than 80 years ago, according to the economist James Bessen.

Here is the full 2019 piece by Dan Kopf, via Rasool Somji.